Another DRAMATIC pound sell-off this week, pound-dollar parity?
September 26, 2022 (Investorideas.com Newswire) Another big sell-off of the pound is to take place this week as it moves towards plummeting to parity with the U.S. dollar, warns the CEO of one of the world's largest independent financial advisory organizations.
deVere Group's Nigel Green's stark warning comes as sterling falls to its lowest level against the U.S. dollar since 1971. In early Asia-Pacific trade, the pound fell by more than 4% to $1.0327.
It follows the mini-budget set out last Friday by PM Liz Truss's new Chancellor, Kwasi Kwarteng, which sent UK-based financial markets spiraling downwards.
Nigel Green says: "The UK government, under the leadership of new PM Liz Truss, is shamelessly gambling with Britain's economy with huge, unfunded tax cuts and increased spending.
"The pound, gilts and the UK's blue-chip index the FTSE all tumbled in response.
"Clearly investors believe that sterling will inflate and government borrowing levels are going to the moon - at a time when the economy is in recession and inflation runs almost at the highest the UK has seen since the 1980s."
The deVere CEO continues: "The Chancellor was out over the weekend defending these plans that the markets have resolutely rejected.
"As the government seems hell-bent on pursuing these approaches in their bid for short-term growth at all costs, we expect the sharp sell-off in the pound to continue."
He goes on to warn: "Considering the economic backdrop, Britain is going to find it increasingly hard to finance this ballooning deficit.
"The result will be further drops in sterling. This, combined with a seemingly unstoppable dollar, and we are likely to see pound-dollar parity."
Before Friday's so-called mini-budget, the newly appointed Chancellor, Kwasi Kwarteng sacked a senior Treasury civil servant after three decades of service and also refused the Office for Budget Responsibility, a government watchdog, to release its verdict on the plans.
Nigel Green concludes: "Unless something surprisingly positive happens in the economy, the pound is on a continued dramatic downward trajectory this week.
"Investors are unlikely to stick around sterling too long as the grim spiral gathers momentum."
t: +44 207 1220 925
e: george@priorconsultancy.co.uk
Twitter: @PriorConsults
deVere Group is one of the world's largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.
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